16. Four transactions are given below that were completed during 2009 by Russell

Question

16. Four transactions are given below that were completed during 2009 by Russell Company. The annual accounting period ends December 31. Each transaction requires an adjusting entry at December 31, 2009. You are to provide the adjusting entries required for Russell Company. No adjusting entries have been made during the year.


A. On December 31, 2009, Russell Company owed employees $3,750 for wages that were earned by them during December and were not recorded. Prepare the necessary entry.


B. During 2009, Russell Company purchased office supplies that cost $1,000 which were placed in the supplies room for use as needed. The purchase was recorded as follows:

2009
Office Supplies Inventory 1000
Cash 1000

At January 1, 2009, the inventory of unused office supplies was $300. At December 31, 2009, a physical count showed unused office supplies in the supply room amounting to $100. What entry is needed?

C. On December 1, 2009, Russell Company rented some office space to another party. Russell Company collected $900 rent for the period December 1, 2009, to March 1, 2010. The rent collected was recorded as follows:

Dec 1, 2009
Cash 900
Unearned rent revenue 900

Prepare the necessary entry:

D. On July 1, 2009, Russell Company borrowed $2,000 cash on a one-year, 8% interest-bearing, note payable. The interest is payable on the due date, June 30, 2010. The note was recorded as follows:

July 1, 2009
Cash 2000
Notes Payable 2000
Prepare the necessary entry:

Explanation / Answer

A.

Dr. Wage expense 3,750

Cr. Wage payable 3,750

B.

Dr. Office suppplies expense 1,200

Cr. Office supplies inventory 1,200<-------(1,000 + 300 - 100 = 1,200)

C.

Dr. Unearned rent revenue 300 <------(900/3 = 300, a month's rent)

Cr. Rent revenue 300

D.

Dr. Interest expense 80 <-------(2,000*8%*(6/12) = 80)

Cr. Interest payable 80

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